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Since the publication of the independent report into the financial affairs of MG Rover and its associated companies, The Insolvency Service …
Since the publication of the independent report into the financial affairs of MG Rover and its associated companies, The Insolvency Service has been taking forward intended proceedings to disqualify the directors. In line with the findings of the independent report, it was the position of The Insolvency Service that taken as a whole, the overall conduct of the Phoenix Four made them unfit to be company directors. The Service particularly highlighted the report’s findings in respect of the way the directors manipulated the assets and income streams through the use of companies in which they, rather than the creditors of MG Rover had an interest, allowing them to benefit through large salaries, dividends and profits.
Commenting on the disqualification undertakings Edward Davey, Minister with responsibility for corporate governance and company law said:
“These disqualification undertakings represent a successful conclusion to a lengthy and complex investigation into the collapse of MG Rover. Peter Beale, John Towers, Nick Stephenson and John Edwards have each been banned from being involved in the management of any company for several years. The outcome of this case serves as an important reminder that unacceptable conduct by company directors can result in lengthy periods of disqualification.”
Peter Beale has been disqualified from acting in the management of companies for six years; John Towers and Nick Stephenson have each been disqualified for five years and John Edwards for three years.
MG Rover Group, the manufacturer of Rover and MG cars went into administration on April 8, 2005 owing creditors nearly £1.3 billion. The Secretary of State appointed Inspectors to investigate the affairs of MGRG, its parent company Phoenix Venture Holdings (PVH) and MGR Capital Limited between the purchase of MGRG from BMW in May 2000 and the date of it entering administration.
The disqualification undertakings were accepted on behalf of the Secretary of State on Tuesday 26 April 2011 and come into effect on Tuesday 17 May 2011.
**Notes to editors:
- The Inspectors were appointed in May 2005 under Section 432 of the Companies Act by then Trade and Industry Secretary Alan Johnson and had wide powers to require documents and the attendance of witnesses, including directors, officers and agents of the company.
- The Government published the inspectors’ report on 11 September 2010. See full report here:
Volume I - http://www.bis.gov.uk/files/file52782.pdf
Volume II - http://www.bis.gov.uk/files/file52783.pdf
- The Inspectors were Guy Newey QC of Maitland Chambers, Lincolns Inn (now a High Court Judge) and Gervase MacGregor FCA of BDO Stoy Hayward.
- The inquiry followed the administration of the MG Rover Group, the manufacturer of Rover and MG cars on April 8, 2005 owing creditors nearly £1.3 billion. The Inspectors were appointed to investigate the affairs of MGRG, its parent company Phoenix Venture Holdings (PVH) and MGR Capital Limited between the purchase of MGRG from BMW in May 2000 and the date of it entering administration.
- They also investigated restructuring changes within the Group which led to the creation of 33 separate companies throughout that period; the scale of financial rewards made to the directors and the events which led to administration itself. This included the role of Government to secure bridge finance while take-over discussions took place with Chinese car manufacturers Shanghai Automotive (SAIC).
- The Inspectors also investigated the purchase, installation and operation of software to eliminate data from a laptop by one of the directors, Peter Beale, the day after the inquiry was announced.
- Disqualification undertakings were introduced in April 2001, they are an administrative equivalent of a disqualification order but do not involve court proceedings. Without specific permission of a court, a person with a Company Director Disqualification, including Undertakings, cannot:- * act as a director of a company; take part, directly or indirectly, in the promotion, formation or management of a company; be a liquidator or administrator of a company; or be a receiver or manager of a company’s property.
- Further information on director disqualifications and restrictions can be found at: http://www.insolvency.gov.uk/directordisqualificationandrestrictions/whatisdisqualification.htm
- The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice. Further information about the work of The Insolvency Service is available from: http://www.insolvency.gov.uk
- BIS’s online newsroom contains the latest press notices, speeches, as well as video and images for download. It also features an up to date list of BIS press office contacts. See [http://www.bis.gov.uk/newsroom](http://www.bis.gov.uk/newsroom) for more information.
Notes to Editors
Name BIS Press Office Job Title
Division COI Phone
Name Lucy-Michael Sutton Job Title
Division Department for Business, Innovation and Skills Phone 020 7215 5977 Fax
Published: 9 May 2011